I Married Warren Buffett

Published in Investing on 27 July 2011

Cliff D'Arcy has taken 15 years to realise he's wedded to the Oracle of Omaha!

It's said of some couples that, like magnets, they are together as the result of 'the attraction of opposites'. It's certain true chez D'Arcy, as my wife and I are like chalk and cheese.

Indeed, we differ in almost every possible way. I'm a chunky six-footer, while she's a petite brunette. I'm an atheist, whereas she's a regular churchgoer. I'm reckless, hot-headed and impulsive, while she's cool, calm and collected.

Nevertheless, we've been a team all of our adult lives and married for 15 years, so we must be doing something right!

My wife, Warren Buffett

What's more, I've reluctantly concluded that, despite my 24 years of market experience, my wife is the better investor. It's simply because she, like Warren Buffett, invests like a girl.

How so? Let me give you some examples:

1. She doesn't trade

One survey of stock-market investors found that men trade 45% more often than women. Frankly, I think this is an underestimate and that men out-trade women far more aggressively than this.

My wife hasn't traded a share in her life. She buys solid businesses, sits back and then waits for the capital gains to come rolling in. While she's waiting, she happily pockets decent dividend income as a reward for her patience.

2. She plays a long game

My spouse rarely (if ever) sells a share once she's bought it. She measures her investing horizon in decades, so doesn't worry about Mr Market's daily pricing pranks. Instead, she buys carefully and then waits to see what happens.

Mrs D'Arcy knows that 'time in the market' beats 'timing the market', so she's a marathon runner, not a sprinter.

3. She doesn't take big risks

For my spouse, investing is all about building long-term wealth, not beating the market.

She's never bought shares on the back of rumours, and doesn't fall for claims that a firm is the 'next big thing'. What's more, she buys mostly blue-chip shares -- members of the elite FTSE 100 index. This may be 'boring', but she's never dropped a six-figure sum on a small-cap share... whereas I have. Oops.

4. She doesn't rush to sell

Amazingly, Mrs D'Arcy still owns some of the first shares she bought way back in 1989, when we were both 21. For the record, these shares are worth 3.4 times what she paid for them, which works out at a compound average growth rate of a mere 5.7% a year.

However, this calculation ignores 22 years of generous dividends. For example, this year's dividend alone equates to 17% of her original buying price, which is a tidy income.

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5. She buys what she understands

My better half isn't tempted by hot high-tech shares, hyped-up wonder-stocks or even -- despite her degree in Medical Biochemistry! -- promising biotech shares.

In truth, she barely buys individual shares at all, because most companies aren't within her 'circle of competence'. Generally, she sticks to two simple approaches: buying discounted shares via employee share schemes, and paying monthly amounts and the odd lump sum into cheap, simple FTSE All-Share index trackers.

6. She admits to ignorance

Buffett is known for his self-deprecating sense of humour, which he uses to puncture his ego. In my experience, this lack of ego is quite unusual among male investors.

Unlike me, my wife isn't awash with self-confidence and, even better, she knows the limits of her knowledge. Hence, she doesn't do anything fancy when it comes to investing. Like Kurt Gödel and his incompleteness theorems, my wife knows there are limits to her knowledge, so she sticks to simple strategies.

7. She ignores share prices

As an experiment, I asked my wife earlier today at what level the FTSE 100 index was. She was unable to answer. What's more, she admitted that she didn't even know her own employer's share price, despite having been online all day (and having worked for this multi-national firm for 22 years).

The honest truth is that, with no plans to buy or sell right now, Mrs D has absolutely no interest in Mr Market's quotes. As a very passive investor, she just keeps investing her spare cash each month and bides her time.

8. She isn't greedy

In the past, my portfolio has been massively more volatile than my wife's. For example, I've made and lost six-figure sums in single days on several occasions. While such big wins made me euphoric, my wife was very much down to earth. Of my huge gains, she would often remark, "Let's see if they last." Quite often, they didn't.

9. She doesn't panic

When the stock market started plunging from mid-2007, my wife shrugged off this slide. Indeed, when I mentioned in March 2009 that the FTSE 100 was plumbing post-2003 depths, she said, "Oh good, I get my bonus in a few days, so it'll buy me a few more shares." Cool as a cucumber, eh?

10.She doesn't fall in love

In many ways, my wife has much better control of her emotions than I do, despite my claim to be the logical one in our relationship. Most importantly, she doesn't fall in love with shares or companies and is quite dispassionate about investing as an art or science. Not for her the 'farm bet' in a darling company, not least because she doubts almost everything directors say.

By the way, my wife seems to have an incredible gift for market timing. On 6 April 1999, she told me to sell all of her shares in her employer, which I decided not to do. As it turned out, that day marked the all-time peak for the share price. Twelve years later, it is still 40% lower. How does she do that?

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

ScottishPound 27 Jul 2011 , 11:04am

How many attempts does MF need to try to make this stuff stick?

You are "reckless, hot-headed and impulsive" and your wife is "cool, calm and collected" - but this is due to the characteristics of individuals and nothing whatsoever to do with male vs female.

Stay calm, make the right decisions and do nothing when doing nothing is the right decision.

i.e. nothing to do with gender.


goodlifer 27 Jul 2011 , 11:32am

Looks to me as if your better half is, like Uncle Warren, a disciple of Great-uncle Ben.

Tortoise1000 27 Jul 2011 , 2:19pm

Could you get her to write the articles, please?

T

CunningCliff 27 Jul 2011 , 3:17pm

Ah, but what if my wife is a good investor, but a bad writer, Tortoise1000? Surely that would be of no help to anyone!

Cliff

CunningCliff 27 Jul 2011 , 3:25pm

Hi ScottishPound,

You claim that individual characteristics and behaviour are unconnected to gender. I disagree.

Indeed, behavioural psychology suggests that certain behaviours and thought processes are strongly influenced by gender and, by inference, genetics and sexual biochemistry.

Men and women behave differently because our evolutionary biology stands to gain from these gender-linked qualities. Vive la différence! ;0)

Cliff

growingmyown 27 Jul 2011 , 5:35pm

Cliff,

Have you really lost over £100k of your family's money in a single day?

If so, does that mean 100k is no big deal to your family and your wife hasn't noticed or your wife has a great sense of humour?

GMO

ScottishPound 27 Jul 2011 , 5:46pm

Cliff,

This is over-simplified gunk turned into a story.

If there was any substance to this, do you not think that financial institutions would have cottoned on to this by now and found the best female investors to be their fund managers resulting in the majority of funds being managed by women and for those funds to be outperforming the funds run by men??

MAACPRIME 27 Jul 2011 , 5:53pm

I'm not so sure it's that wise to buy shares in your employer.

There's been too many cases of companies going to the wall, their employees getting the sack and seeing the value of their accumulated shares in said employee plummet.

I'd rather hedge my risk and buy elsewhere.

Apart from that, the lack of emotion is commendable but the lack of interest in prices isn't. Paying attention to prices means you can often make easy gains on shares which are undergoing excessive hate from the institutional investor community.

kelvin123 27 Jul 2011 , 8:14pm

Cliff
My wife's portfolio has many similar characteristics to that of your wife's. It is also true that it has comfortably outperformed my more volatile and more frequently traded portfolio by some margin since its inception. So, is my wife a better investor than me? I don't know. She hasn't bought a share in her life. I manage both portfolios' and choose investments that mirror our respective personalities. ie steady and risk adverse shares for hers and more adventurous short term bets on mine. Combined, they probably make up a fairly balanced set of investments. However, I'm aware that one or other of us might end up being married to a much richer partner at some point in the future, but that's part of the fun.

RiverCactusMario 28 Jul 2011 , 1:52pm

Great article, Cliff

Neil

Duddude 28 Jul 2011 , 2:42pm

Notwithstanding some off the respondents confusion on the subject, what Chris said was;

'What's more, I've reluctantly concluded that, despite my 24 years of market experience, my wife is the better investor. It's simply because she, like Warren Buffett, invests like a girl'

He then described the characteristics of a savvy long term investor, making decisions in a space they are comfortable with and understand. However, I do suspect that Mr(s) B's big bucks have been made on stupidly undervalued stocks - anyone know better ?

Anyway, the point is, what an earth has this got to do with being a girl ? Absolutely nothing. Mr B has a lot going for him, he has been mostly right, not mostly wrong, but I suspect he is, in fact a chap.

Johnpope1 28 Jul 2011 , 3:33pm

I've no idea whether that type of investing is the girl's approach. What I have found is that long-term investing can give excellent long term capital growth and good dividends.

A1chemist 28 Jul 2011 , 4:12pm

In spite of the fact that the law declares that women are equal; in reality it was usually the husband who provided the investment resources for the family in the first place and it is usually the husband who manages all the family’s investments, which includes all of the share dealing accounts and ISAs, while the wife takes a back seat.

If the details of the true way in which share portfolios were managed was known I suspect that people would discover that most husbands manage their wife's share portfolios for them and the reason why the woman’s share accounts is less actively traded is because the husbands tend to put the less actively traded, (steadier/long term hold), shares in the accounts that are registered in their wife's name.

Jimi97 28 Jul 2011 , 8:49pm

Cliff,
It must be a relief that you did not sell all your wife's shares - you might be be writing your articles from the clink having been one of the few to be convicted of insider dealing ;-)

sageofyork 28 Jul 2011 , 9:51pm

BH only up 25% since 1994 and no div's !!!

CunningCliff 29 Jul 2011 , 11:35am

Duddude, "Notwithstanding some off the respondents confusion on the subject, what Chris said was"

Who's Chris?

Cliff ;0)

Slimide 30 Jul 2011 , 11:08am

Nice article.
There are several other real life stories like this out there: Anne Scheiber is one. She made $22m from an initial $5k over the long term. Rarely traded, reinvested dividends etc.

Then there's the story of the school bus driver in the book The Millionare Next Door ( not the first book but the second ). Can't remember the details but he put his kids through college and had about $3m ( or so ) to spare. That's just from his school bus drivers salary which would be around minimum wage I'd imagine.

There's also a woman who lived in a cramped cottage and was very frugal. Never had any money for anything but they found out she was a multimillionaire having invested in stocks for the long term after she had died. Can't remember her name though.

I'm sure there are more stories such as these around.

Figured out your wife works for GSK. Nice divi !!

thairet 31 Jul 2011 , 6:37pm

Cliff, Kudos to your wife.
However, myself and I strongly suspect you, would not be happy without the "rush" of trading.
Horses for courses!
Cheers.

sliboy 02 Aug 2011 , 9:57am

I guess its really why you need separate accounts to do different styles of investing?
My partner also invests like your wife, wow the profits they make from these share schemes. Mind after 5 years she sells the shares and buys a mixture of FTSE tracker and BRK.B shares so she is not invested in her company to massive amounts. How these grow into tidy sums after a few years. Mind she also did buy Thorpe lighting and has done well on those. Yes, the institutions are making a huge error not employing these women, mind what would they find to do most of the day if they do not run around trading and panicking about a 2 point drop in the market?

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